The HHS Office of Inspector General (OIG) released a report at the end of August documenting inappropriate payments for diabetes test strips (DTS). Recent investigations and prior OIG studies have found that DTS is an area vulnerable to fraud, waste, and abuse. For this review, they noted that in the period covered by the review (2011), Medicare allowed approximately $1.1 billion to 51,695 suppliers for diabetes test strips (DTS) provided to 4.6 million beneficiaries. The OIG analyzed Medicare-allowed DTS claims and inpatient claims from hospitals and Skilled Nursing Facilities (SNFs) for beneficiaries with DTS claims. In conducting their review they focused on suppliers that billed amounts unusually high-according to at least one of six measures of questionable billing-that were subsequently allowed by Medicare; geographic areas for these questionable-billing suppliers; and extent of questionable billing before and after implementation of the Competitive Bidding Program.

They found from the limited scope of their review that Medicare inappropriately allowed $6 million for DTS claims billed (1) for beneficiaries without a documented diagnosis code for diabetes, or that inappropriately overlapped with (2) an inpatient hospital stay, or (3) an inpatient SNF stay. Further, we found that $425 million in Medicare-allowed claims-made by 10 percent of DTS suppliers-had characteristics of questionable billing. Suppliers in 10 geographic areas nationwide were responsible for 77 percent of questionable billing.

The CMS implemented the Competitive Bidding Program in 2011 to reduce payments for durable medical equipment, prosthetics, orthotics, and supplies and help reduce fraud and abuse. Mail order DTS is included in the Competitive Bidding Program, but non-mail order DTS currently is not. The noted that the Competitive Bidding Program appears to have reduced questionable billing for mail order DTS in Competitive Bidding Areas (CBA). Similar reductions in questionable billing did not occur in non-CBA areas or for non-mail order DTS.

The OIG recommended that CMS should enforce existing edits (system processes) to prevent inappropriate DTS claims, and CMS should increase monitoring of DTS suppliers’ Medicare billing. CMS partially concurred with these recommendations. In two other recommendations CMS concurred and that was they should provide more education to suppliers and beneficiaries about appropriate DTS billing practices, and CMS should take appropriate action regarding inappropriate Medicare DTS claims and suppliers with questionable DTS billing.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.